Satellite TV provider Dish Network plans to take on cable and DSL broadband service with a new fixed wireless service that it's recently begun testing. But the success of its new business could depend on its ambitions to acquire more spectrum.

Last week, Dish announced that it has already begun testing the new wireless broadband network that uses 4G LTE technology in the Blue Ridge Mountains near Waynesboro and Afton, Va.

Unlike other 4G LTE services from carriers, such as AT&T and Verizon Wireless, the 4G LTE service that Dish is building is for in-home broadband service only. Like it's satellite TV service, it requires a receiver to be attached on the roof.

Dish's need for spectrum
Right now, Dish is using wireless spectrum in the 2.5GHz band from partners, such as NTelos. The company doesn't currently own any of this particular band of high-frequency spectrum. But it hopes to get its hands on some soon.

This is why Dish is pushing so hard to acquire Clearwire, a company that is majority owned by Sprint. Clearwire owns a lot of 2.5GHz wireless spectrum, which it's used to build a nationwide fixed and mobile wireless network using 4G WiMax technology.

Meanwhile, Japan's SoftBank is trying to buy Sprint. But Dish has also put in its own offer to buy Sprint. SoftBank recently increased its bid for Sprint, which diminishes Dish's chances of getting Sprint. The two companies have stopped negotiating, and the satellite TV provider has until June 18 to make its best and final offer.

In addition to Clearwire and Sprint, Dish is also supposedly after LightSquared, another company that had planned to build a nationwide wireless broadband network using high frequency spectrum. LightSquared is currently reorganizing under bankruptcy protection.

While Dish may be able to strike deals and partnerships with companies, such as Ntelos to build some areas of its new fixed wireless broadband network, the company still needs some spectrum of its own to deliver this service.

What's the service like?
As for the service itself, initial speed tests show downloads between 20Mbps and 50Mbps. Actual, customer speeds when the network is fully deployed are expected to be lower.

That said, the speeds should be competitive with other cable and DSL services, said David Zufall, vice president of wireless development at Dish. While it's unlikely that Dish will be able to deliver ultra high speed service that competes with higher tiers of service from cable operators and fiber-based services from the AT&T and Verizon, it will be able to compete head-to-head with low to mid-tier broadband services delivered by phone companies and cable operators.

"We're not looking to take over the entire broadband market," Zufall said. "There will be places where fixed wireless works well, and other places where traditional cable is the right answer."

Zufall explained that Dish's new service is geared toward people who are currently underserved by cable and DSL broadband services. While this would surely include rural customers, it might also include others in suburban areas where cable or DSL might not be available.

In other words, the target market is very similar to the customers Dish already serves with its satellite TV offer. In fact, Zufall said that Dish's existing satellite TV customers are terrific candidates for the broadband service as well.

"The two services go very well together," he said. "We already have to install satellite dishes on roofs for the TV service. And this also requires a receiver on a rooftop."

Zufall wouldn't say when Dish would conclude its network testing or when it plans to roll out the service to other areas. He also wouldn't comment on pricing. But it's clear that Dish needs additional spectrum to build its network.

How Dish plans to deploy its broadband service
And the spectrum that Clearwire owns is particularly valuable for this network. What makes 2.5GHz spectrum so valuable for Dish is that there is a lot of it. Zufall said this means the company will have plenty of capacity to offer a speedy wireless broadband service.

Because there is likely to be a lot of spectrum available for the service, Zufall said he doesn't think the company will have to put usage data caps on the service, the way AT&T and Verizon Wireless have done with their own 4G LTE wireless services. This will also help the service compete more aggressively with existing cable and DSL broadband services.

Even though Dish's idea for offering a fixed wireless broadband service sounds great, Clearwire, which offered a similar service in 88 cities using the 4G WiMax technology, had a difficult time delivering consistent and reliable service.

Zufall said that Dish believes its fixed wireless broadband service will be more reliable and will able to reach farther than Clearwire's service. Network coverage can be tricky with the 2.5GHz spectrum because it's considered high frequency. This means it can offer a lot of capacity, but the signals travel over shorter distances and are less able to penetrate through obstacles such as walls as compared to lower frequency spectrum.

But Zufall said that the way Dish is building its wireless broadband network is very different from how Clearwire has built its network. As a result, it won't have the same reliability and distance issues that Clearwire's network had.

The reason why is that Clearwire sold its service at retail and had customers install their own receivers inside their homes. The Dish service requires a special Dish receiver that attaches to the roof to accept the signal, which is then transmitted over coaxial cable into the home. This is how Dish offers its TV satellite service.

"Spectrum at this frequency requires that you put a device on the outside of the home," he said. "Otherwise you lose a lot of the signal range when it has to penetrate in-building."

Zufall said that by keeping the signal outdoors, his engineers are able to overcome the coverage obstacles that Clearwire faced. Also he said the fact that professionals are installing the equipment is another factor that will make reception better.

"When the device is professionally installed, the installer knows where our cell sites are and can configure the device to get better reception."

The question now for Dish is whether it will be able to the spectrum it needs to become a viable broadband competitor.

About the author

Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie.
See full bio